Inheritance Tax (IHT) Calculator
Enter the estate value and, if a home is being left to children or grandchildren, its value — the calculator applies the £325,000 nil-rate band, the residence nil-rate band and the £2 million taper, then shows the 40% charge on the remainder.
How it works
Every estate has a £325,000 nil-rate band taxed at 0%. If a home (or share of one) passes to direct descendants — children, grandchildren, step and adopted children — an additional residence nil-rate band of up to £175,000 applies, capped at the home's value. Both bands are frozen until at least 2030.
Estates worth over £2 million lose £1 of residence band for every £2 above that line, so it disappears entirely by £2.35m. Whatever exceeds your combined bands is taxed at 40% (36% if 10%+ of the net estate goes to charity — not included in this estimate).
Married couples and civil partners inherit each other tax-free, and unused bands transfer to the survivor — a couple can pass on up to £1 million combined. This calculator estimates a single estate without spouse transfers, lifetime gifts (7-year rule) or business/agricultural reliefs; for estates near the thresholds, professional advice pays for itself.
From April 2027 unused pension pots are due to come into the IHT net — a major announced change worth planning for now.
FAQ
How much can I leave tax-free?
At least £325,000 (nil-rate band). Leaving your home to children or grandchildren adds up to £175,000 more — £500,000 total. A married couple combining both sets of bands can leave up to £1 million tax-free. All figures are frozen until at least 2030, which quietly drags more estates into the net each year.
What is the residence nil-rate band taper?
Estates over £2 million lose £1 of residence nil-rate band per £2 of excess. A £2.2m estate keeps only £75,000 of the £175,000 band; at £2.35m it is gone entirely. The standard £325,000 band is never tapered.
Do gifts made before death count?
Gifts made within 7 years of death are added back into the estate (with taper relief on the tax after 3 years). Gifts from surplus income, £3,000 annual gifts and small gifts are immediately exempt. This calculator does not model gifts — significant lifetime giving needs specific advice.
Will pensions really be subject to IHT from 2027?
That is the announced plan: from April 2027 unused pension funds are due to be included in the taxable estate, removing today's main IHT shelter. If your planning relies on leaving a pension untouched, review it before then — the change is expected to bring many more estates over the threshold.